7 Articles ETF Investors Must Read: 2/1

Bullish sentiment continues to dominate on Wall Street as upbeat corporate earnings are keeping confidence levels elevated. Major equity indexes have enjoyed a very green start to the new year amid the improving outlook, and the S&P 500 Index and Dow Jones Industrial Average are both sitting on fresh five-year highs; as expected, frustrated bears and so-called experts are calling for a market top in the face of rising prices, leaving many of those on the sidelines puzzled as to which way stocks will swing next [see Visual History Of The S&P 500].

On the homefront, the recovery is continuing to show signs of improvement although major economic data releases remain mixed as a whole. Durable goods orders and ADP employment data came in better than expected earlier this week, adding fuel to the ongoing rally. On the other hand, U.S. GDP painted a worrisome outlook after economic output contracted by 0.1% for the quarter thanks to cuts in government spending [see 3 Economic Charts Bears Love To Ignore].

Below we outline seven insightful articles circulating around the financial space this week:

From Order to Chaos and Back Again at Political CalculationsThis article takes a very creative approach to dissecting U.S. stock market cycles over the last 20+ years; the in-depth analysis presented here incorporates major fundamental factors and strives to distinguish between periods of “order” and “chaos” on Wall Street.

Why We Don’t Care If The Stock Market Is “Overbought” at Morpheus Trading Group
Deron Wagner shares his thoughts on the current rally and offers his take on why the term “overbought” may lead you astray in times when markets are strongly trending higher; he also dives into technical analysis of two popular emerging market ETFs with attractive charts.

This Big Four Economic Indicators at AdvisorPerspectives
This week shaped out to be fairly eventful as several key data releases hit the street, and with so many numbers to digest, it really pays off to take a step back and take a look at the big picture. Doug Short’s article offers a concise analysis of the current economic environment by taking a look at industrial production, real income, employment and sales data.

The Most Common Error In Stock Market Research at A Dash of InsightJeff Miller offers a very informative and easy-to-follow guide for anyone looking to get their hands dirty with some old fashioned investment research. This is a must read for self-directed investors as it covers the numerous pitfalls that many fall victim to when conducting market research.

Government Expenditures Plus Transfer Payments at Mish’s Global Economic Trend AnalysisThe latest U.S. GDP report showed a worrisome contraction and many were quick to point out cuts in government spending as the culprit behind the lackluster data. In this article, Mike Shedlock reviews the recent GDP numbers under a microscope, offering his take on what the data really suggests.

VIX Doomsayers Are Out of Data at Condor OptionsTrading activity in the options market is often used to confirm equity market price action as well as predict potential reversals. In this article, Jared Woodward debunks a popular view regarding the ongoing decline in volatility on Wall Street.

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